Proposed Limits on Executive Compensation at Certain New York-Based Non-Profit Organizations

Proposed Limits on Executive Compensation at Certain New York-Based Non-Profit Organizations

December 6 2012

This is an update to our Client Alert issued June 1, 2012, describing the preliminary round of proposed regulations designed to implement Governor Cuomo’s Executive Order, which stated generally that organizations receiving state funding would need to cap compensation paid to any executive at $199,000 per year.  This update describes the relevant changes that have been made to the Revised Regulations and the possible impact of such changes on qualifying non-profits.

The “Revised Regulations” were released by 13 NY State agencies to clarify a number of ambiguities and concerns raised in response to the preliminary draft regulations.  These regulations are now scheduled to take effect on April 1, 2013.

State funds cannot be used to pay a non-profit executive any amount of compensation in excess of $199,000, however this cap will be reviewed annually to assess whether an adjustment is necessary.  The Revised Regulations go on to clarify that absent a waiver to the contrary, where alternative funding sources are used to pay an executive in excess of $199,000, the non-profit still must do both of the following:

  1. Pay 75th percentile or less of compensation as established by a compensation survey identified, provided, or recognized by the applicable State funding source(s), and
  2. Ensure that compensation is assessed based on appropriate comparable data and approved by the Board (or equivalent body) including two independent members.

Click here for the full Alert